By John A. Tures, Professor of Political Science, LaGrange College

There’s a myth that the good old days in American economics were fueled by tariff policies. Is that the case? I not only provide research by a pair of economics and business professors, but also examine America’s performance before and after we shifted from taxing trade to tax-free trade.

For research, I turn to the respected Independent Institute, a journal that’s heavily supportive of free market economics. Authors Scott A. Burns and Caleb S. Fuller write “The Fairy Tale of Returning to a Tariff-Funded Government” as part of their series “Mythbusters: Debunking the New Mercantilists.” They take on the argument that a pro-tariff America that imposed government taxes upon trade was better than modern capitalism’s economics, where consumers have more choice and free markets are more important than socialist policies.

“Upon closer scrutiny, our Founding Fathers didn’t share a deep affinity for tariffs, nor did they think tariffs were some secret sauce for economic prosperity. They imposed tariffs out of necessity, not desirability. In the founding era, there were no planes, trains, and automobiles delivering goods from abroad—only ships. Collecting what was effectively a small toll on foreign ships was a simple way to raise revenue. Income taxes? Not so much, especially in an age before the IRS or digital withholding.”

Burns is an associate professor of economics at Southeastern Louisiana University in the Department of Management and Business Administration. Fuller is the Associate Professor of Economics at Grove City College. They published their work on May 23, in the midst of this new trade war.

“Nixing income taxes in favor of tariffs may sound enticing to many Americans (especially after Tax Day),” Burns and Fuller write. “But unless the administration is willing to slash entitlement spending, disband our standing army and return us to a world of dirt roads and private militias, replacing income taxes with tariffs is a fiscal nonstarter. Economists’ opposition to reverting to a tariff-based tax system isn’t ideological—it isn’t rooted in free market dogma. It’s rooted in basic arithmetic. The numbers just don’t add up.”

My research on tariffs shows that these taxes on trade are strongly linked to the Great Depression. The Smoot-Hawley bill was introduced months before the Stock Market Crash. Countries retaliated against those draconian measures well before October 1929. The Senate approved the bill, and Hoover signed it into law the following year, which made the Great Depression worse, not better. But the trade war started before the economic calamity.

“Higher tariffs, however, discourage imports, shrinking the potential tax base,” Burns and Fuller conclude. “Drastically raising tariffs would effectively staunch the flow of imports, thereby reducing the amount of revenue they can bring in. Hence, the Catch-22 of tariff policy: higher tariffs can only raise revenue up to a point, beyond which they actually decrease revenue. (For more on this, see our previous article.)”

There’s another problem with today’s tariff policy that closely resembles the disastrous Smoot-Hawley Bill: uncertainty. I’m sure our government thinks they’re pretty slick by keeping “our enemies” off-balance with this “unpredictability.” But they’re also throwing our friends and allies, as well as our own business community, for a loop. The Smoot-Hawley Bill was supposed to be small at first, just to protect agriculture from the 1920s disastrous policies. But Republicans in Congress just couldn’t resist piling on in the bill until it became an unexpected massive piece of legislation.

Smoot and Hawley were soundly defeated in their bids for reelection, as were other Republicans. Hoover’s shellacking was one of the worst ever for an incumbent. It will be the fate of the modern GOP until the House and Senate retake tariff power, and restore some economic sanity.

When John A. Tures is a professor of political science at LaGrange College in LaGrange, Georgia. His views are his own. He can be reached at jtures@lagrange.edu. His “X” account is JohnTures2.